Wednesday, September 22, 2010

Over Consumption and Prudence

The podcast had an underlying theme of the Keynesian value of consumption and the reality of sustainability. Sustainability in the economic output sense that is.

Many people believe that people should work to have money to spend; this is typically touted as what fuels the economy. My question to people that believe this is "To what end?" what is the goal of a system like this? I see all around me the effects of overconsumption; sedentary lifestyles, poor quality in goods and services and a general disregard for mounting debt.

The lecture talked about sustainable economic output, the simple idea that scarcity limits an economy's ability to create. This is where I believe the issue lies. There is a severe limit to the amount of frivolous goods and services that can fit into a sustainable system. Whenever we see these bubbles burst they are on intangible and impractical ideas. I would like to believe that if the general growth of the economy was slow and had large amounts of risk an atmosphere of prudence rather than overconsumption would be created.

With such risk people would be forced to learn. This is the difference between what some of my peers have referred to as the Austrian "You’ve just got to let it cure itself" mentality and the reality that Austrians have learned that intervention will only perverse the system. In prudence individuals will have to think before they act. Hopefully looking to past failures for guidance.